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Responsible Investor

NZ Super Fund facing questions over stake in tobacco-linked Chinese

Holding revealed by Finance Minister contravenes tobacco investment policy

by Daniel Brooksbank | August 12th, 2011

The NZ$19.2bn (€11.2bn) New Zealand Superannuation Fund has faced questions
in Parliament over its stake in tobacco producer Shanghai International
Holdings Ltd. (SIHL), the Hong Kong-listed conglomerate.

Finance Minister Bill English, in a written answer to a question from the
Green Party, disclosed that the fund holds 80,000 shares worth some
NZ$333,000 in SIHL, whose subsidiary Nanyang Brothers Tobacco Co. Ltd. is
the largest tobacco manufacturer in Hong Kong.

In a statement cited by local media, the fund – which has had a tobacco
exclusion policy since 2007 – explained said it had categorised SIHL as an
industrial conglomerate and thus it was not captured in its exclusion
screening process.

Norway’s Government Pension Fund excluded SIHL in March this year over its
tobacco operations.

NZ Super, a founding signatory to the UN Principles for Responsible
Investment, said it recently broadened its screening methodology to resolve
the problem, which has resulted in more companies joining its tobacco
exclusions list.

“Pending circulation to our external investment managers, the expanded list
will be available on the Fund’s website – as the current list has been since
2007 – by 30 August. The list will include Shanghai Industrial Holdings
Ltd,” it said.

Greens Co-Leader Russel Norman called the management of the fund on ethical
investment “complacent and unprofessional”.

He added: “The Fund continues to invest in and profit from firms that
produce nuclear weapons, sell weapons to Burma, violate human rights, and
cause severe environmental damage.”

Norman said it still invests in a range of companies that are excluded by
its Norwegian peer, including the likes of BAE Systems, Norilsk Nickel,
Barrack Gold, Vedanta Resources, Freeport McMoRan Copper & Gold and Elbit

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